Animal-focused biotech Benchmark (BMK:AIM) is one of London’s largest fallers on Wednesday after warning that sales and profits will be significantly lower than expected this year. The shares have plummeted 28.7% to 79p
Rising generic competition is hitting its sea lice treatment, Salmosan, in Chile during a peak time in the seasonal sales cycle. The cost of launching a new formulation of the product in Norway is also being blamed.
Ultimately, this blows a huge hole in the company profits. Analysts at broker Cenkos have slashed forecasts for 2015. Revenue estimates have been cut from £63.8 million to £41.7 million while earnings before interest, tax, depreciation and amortisation (EBITDA) is now expected to be just £800,000. The forecast was for £13.3 million.
Long-term the broker remains bullish on the animal breeding and health specialist. It points to the products set to emerge from its pipeline to win back lost market share as drivers of value.
‘The longer-term strength of the pipeline remains a strong feature of this business and we believe that management have taken steps to ensure pipeline success and a recovery in its key Salmosan markets.’
But investors are likely to remain wary, at least until there's more clarity on emerging competition and prospects. Benchmark, which also provides technical publishing and consultancy services, is due to post interim results for the six months to the end of March on 23 June.